Stock slide lifts gold's safe-haven demand

Gold prices are up, helped by a weaker dollar and as a recovery rally in global stock markets fizzled out, driving investors toward the safe-haven asset.

Spot gold was 0.8 per cent higher at $US1,277.45 per ounce overnight, after hitting $US1,279.06 in the previous session, its highest since June 19.

US gold futures settled up 0.6 per cent to $US1,281.10 per ounce.

"The weaker dollar index is supporting the buying interest in gold and the U.S. stock indexes have pulled back significantly, which has also helped," said Jim Wyckoff, senior analyst at Kitco Metals.

"Also, the technical pasture of the gold market has become significantly bullish on a near-term basis, which is inviting some chart-based buying too."

A global equity rally fueled by a dramatic surge on Wall Street ran out of steam on Thursday, after a fall in China's industrial profits showed the pressures on the global economy.

US stocks fell sharply on Thursday.

The dollar index, a gauge of the greenback's value against six major currencies, fell 0.6 per cent on Thursday, making gold cheaper for buyers of other currencies.

The partial US government shutdown, which is widely expected to continue, was also supporting gold, analysts said.

"A slowing world economy might bring in some safe-haven demand. But any reduction in world economic growth will also reduce consumer demand for gold in countries like China and India," Wyckoff said.

Investor confidence in bullion was reflected in a surge in the holdings of SPDR Gold, the largest exchange-traded fund.

SPDR holdings rose 2.1 per cent on Wednesday, the best one-day percentage gain since July 2016.

"There has been an extensive surge in the gold exchange-traded fund holdings and there is absolutely no shortage of momentum there. Investors are just preparing themselves by buying gold as there are several uncertainties heading into 2019," said Naeem Aslam, chief market analyst at Think Markets UK.

SPDR holdings, at their highest since August, have risen about 8 per cent since touching more than two and a half year lows in October.

Among other metals, silver was up 1.3 per cent at $US15.23 per ounce, after hitting its highest level since mid-August at $US15.27.

Platinum was down 0.1 per cent to $US793.80 per ounce, while palladium rose 1 per cent to $US1,266.60.